Garmin Reports 1Q Results

In a release dated May 6, the company stated:

First Quarter 2009 Financial Summary:

- Total revenue of $437 million, down 34 percent from $664 million in first quarter 2008

- Automotive/Mobile segment revenue decreased 43 percent to $260 million in first quarter 2009

- Marine segment revenue decreased 32 percent to $38 million in first quarter 2009

- Aviation segment revenue decreased 31 percent to $59 million in first quarter 2009

- Outdoor/Fitness segment revenue increased 13 percent to $80 million in first quarter 2009

- All geographic areas experienced a slowdown in revenues:

- Gross margin increased sequentially to 44.9 percent for the first quarter 2009 from 41.1 percent in fourth quarter 2008 and declined compared to 48.2 percent in first quarter 2008

- Operating margin decreased sequentially and year-over-year, with first quarter 2009 at 13.3 percent, compared to 26.0 percent in first quarter 2008 and 22.6 percent in fourth quarter 2008

- Earnings per share decreased 64 percent to $0.24 from $0.67 in first quarter 2008; excluding foreign exchange, EPS decreased 64 percent to $0.25 from $0.69 in the same quarter in 2008

- Generated $286 million of free cash flow in first quarter 2009 for a cash and marketable securities balance of over $1.2 billion.

Dr. Min Kao, Chairman and Chief Executive Officer, said, "The first quarter of 2009 represented Garmin's most challenging quarter since becoming a public company in December 2000. Macroeconomic factors have contributed to a significant slowdown in consumer discretionary spending which has been further exacerbated by ongoing channel inventory reductions by our retail partners in the PND industry.

"As we look specifically at the auto/mobile segment, we believe that inventory levels have reached their low point and that sell-in to the channel will begin to more closely follow sell-through trends in coming quarters. This is a promising factor given that sell-through trends in the United States have continued to show growth in the first quarter. The same cannot be said of Europe where sell-through has declined on a year-over-year basis. Our focus moving forward for this segment will be on improving pricing trends and profitability, which were negatively impacted in the first quarter due to price protection offered to our major retailers and inventory reductions of older models, and maintaining and growing market share where appropriate. We will leverage the strength of our balance sheet to outperform competitors through product innovation and customer service in this difficult market and be better positioned when consumer confidence returns.

"Our aviation and marine segments also struggled in the quarter as both industries face significant challenges in 2009. In the aviation segment, we will focus on stabilizing our sales and margins in this business and continuing to gain market share through certification of our G1000 and penetration of the G600 as a retrofit solution. On the marine front, we did see a sequential increase as the marine season approaches but this seasonal increase was not at a level experienced in the past. We continue to gain market share as an OEM partner but these gains are not enough to offset the industry-wide declines. Again, we will focus our efforts on gaining market share and bringing to bear the most innovative products in both of these segments so we are well-positioned for growth when the industries begin to recover.

"The outdoor/fitness segment posted growth of 13 percent in the quarter driven by the ongoing channel penetration and market share gains of our fitness products. We continue to build on the strength of our brand in this category and a growing base of loyal customers and are planning exciting new product introductions in the second quarter."

A provider of satellite navigation, Garmin and its subsidiaries have designed, manufactured, marketed and sold navigation, communication and information devices and applications since 1989, most of which are enabled by GPS technology. Garmin's products serve automotive, mobile, wireless, outdoor recreation, marine, aviation, and OEM applications.

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